Boost your child's savings

If your son or daughter is set to celebrate their seventh birthday this month, they will be among the first to receive a present from the Government in the form of a top-up to their tax-free Child Trust Fund (CTF).

Launched in 2005 with the aim of giving young people a financial head start in life, CTFs were opened for all children born after 1 September 2002, with a £250 voucher (£500 for children from the poorest families).

Each child then receives another £250 instalment to their nest egg when they reach seven, with low-income families getting £500. To date, around 4.4 million* children have a CTF account.

Review your offspring's nest egg

This top-up, paid directly into your child's CTF savings account, will come as a welcome cash injection, but rather than sit back and do nothing, you should view this windfall as an opportunity to review the scheme you have set up. Some parents may not be aware that they can move their child's account to a different provider at any time, and change the type of account.

Choosing a fund

When it comes to selecting a fund, there are three main types of tax-free account to choose from: a "stakeholder" or "non-stakeholder" fund, both of which are shares-based, or a deposit account, which is cash based.

• Stakeholder funds invest in equities before switching to less risky investments, such as bonds and cash, as the child reaches their teens through what is known as a "lifestyling" element; maximum annual fees are capped at 1.5 per cent.

• Non-stakeholder funds carry higher charges than stakeholders, but aim to generate more growth through riskier stock market investments.

Deposit accounts are run by banks and building societies and are very similar to ordinary savings accounts - so there is no risk of loss.

If you fail to invest the voucher within a year of the birth of your child, the Government will select a default stakeholder fund for you instead.

Check your fund's performance

Given that your son or daughter's CTF has been growing for seven years now, this is a really good time to check its performance. Providers normally send out an annual statement, so you can use this to monitor how well your chosen fund is doing. If you're not happy with its performance, consider making a switch to another provider.

Get more tips on boosting your child's savings at http://www.confused.com/savings